Thursday 30 August 2012 03.00 EDT
First published on Thursday 30 August 2012 03.00 EDT

The amazing euro crisis continues – another meeting, another non-decision. You might have imagined that, like a brick being tugged with a piece of elastic, something would have happened by now.

But no, the euro, it seems, is stuck in a political no man's land – trapped between two opposing world views. And the battleground is not economics, but ethics.

Thus, the ongoing debate about pooling of debt founders less on practicalities than the categorical imperative that those who have been careful with their budgets should not have to help those who have been careless.

And while the Spanish and Greeks insist that there is a moral obligation on the part of the wealthy countries to help them over bad times, the Germans and Dutch fume at the idea that work-shy, tax-evading grasshoppers with unregistered swimming pools should be bailed out by their dutiful ants.

The former ECB chief economist, Otmar Issing, illustrates the blockage by declaring bluntly: "Greece cheated to get in, and it's difficult to know how we should deal with cheats." Certainly, nowadays Greece freely admits it fiddled the figures to enter the currency bloc, claiming its deficit was less than 1% of GDP, whereas even in the boom years, its budget disregarded the 3% limit. This is a country rated by Transparency International as the most corrupt in Europe and top of the table for tax evasion.

The media have merrily fanned the flames. A satirical picture for a German magazine caused outrage in Athens. The Venus de Milo (considered by the Greeks to be part of their looted heritage) – was depicted making a rude gesture, with the caption: "Cheats in the euro family". In response, a Greek daily mashed up a photo depicting the statue atop Berlin's Column of Victory holding up a swastika.

In similar nasty vein, Paul Sheehan, a columnist for the Sydney Morning Herald, has called Greece "a cancer in the eurozone", one where cheating is the national sport. There are a lot of Greeks in Australia and Melbourne is the third largest "Greek city" the world. But that's Melbourne, not Sydney, and Melbourne has its own paper.

On the other side of the euro divide, foolish talk grows of Greece and its fellow peripheral nations being "systematically raped by Germany and France". The mayor of Athens demands that Germany should now pay €70bn (£55bn) for two civilian massacres by its soldiers during the war, while the country's deputy prime minister told the BBC that Germany also owed Greece for stealing its gold, a point reinforced by Daniel Cohn-Bendit in a special appearance on YouTube.

Of course this is empty, if increasingly popular, rhetoric. To enable Europe to emerge from the ashes of the second world war, the Marshall Plan wisely put a block on competing national claims, including almost all wartime clearing debt. Yet now that Germany is rich, the call goes up for a re-opening of old debt issues.

And even as Greece's supporters hurl angry accusations at the 'Nazis', the reality is some €100bn of Greek wealth has recently flowed out of the country (depleting its cash-strapped banking system), while the ECB is keeping it afloat by buying zombie bonds. Actually, Greek external debt remains a rather modest €38,000 or so per person, rather less than either Germany or France's, let alone the UK's whacking €117,000. It's just the puny Greek GDP that makes it stand out.

The eurozone debt problem remains comparable with that of the US, and potentially manageable. Alas, since its inception in the 1950s, the European project has been hostage to the competing views of governments all resolutely set on advancing national interests at the expense of their partners. If the commission president, José Manuel Barroso, now tries to speak for 'the common interest', such talk is barely audible in the Hobbesian jungle of EU politicking.

The bottom line is that governments and citizens in the relatively prosperous northern nations can borrow easily and cheaply, too easily and too cheaply, while fellow Europeans in the troubled nations are paying much higher interest rates that are strangling their economies. That's not only unfair, it's economic madness.

• Martin Cohen is a writer on philosophy, social science and green economics. He is editor of The Philosopher and his latest book is The Doomsday Machine: the high price of nuclear energy, the world's most dangerous fuel